Peer choice in CEO compensation

• 成果类型: Article
• 署名作者: Albuquerque, Ana M.; De Franco, Gus; Verdi, Rodrigo S.
• 署名单位: Boston University; University of Toronto; Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2012.10.002
• 发表日期: 2013
• 页码: 160-181
• 关键词: Executive compensation; benchmarking; Peer groups

摘要

Current research shows that firms are more likely to benchmark against peers that pay their Chief Executive Officers (CEOs) higher compensation, reflecting self serving behavior. We propose an alternative explanation: the choice of highly paid peers represents a reward for unobserved CEO talent. We test this hypothesis by decomposing the effect of peer selection into talent and self serving components. Consistent with our prediction, we find that the association between a firm's selection of highly paid peers and CEO pay mostly represents compensation for CEO talent. (C) 2012 Elsevier B.V. All rights reserved.